Oil switched between gains and losses as traders weighed strong US jobs data that bolstered expectations of further rate hikes and key data due later expected to show shrinking stockpiles.
(Bloomberg) — Oil switched between gains and losses as traders weighed strong US jobs data that bolstered expectations of further rate hikes and key data due later expected to show shrinking stockpiles.
West Texas Intermediate fell below $72 a barrel after earlier adding 0.8%. US companies added the most jobs in more than a year in June, sending most markets lower on expectations that Federal Reserve monetary policy will continue to tighten.
Following announcements earlier in the week from Saudi Arabia and Russia that they would reduce supplies in a bid to stem a slide in prices, the kingdom lifted its flagship Arab Light crude price to Asia on Thursday and also boosted prices for Europe.
That came ahead of US crude stockpile figures. American Petroleum Institute data Wednesday estimated that nationwide US crude inventories declined by 4.4 million barrels last week, according to people familiar with the data.
Crude remains about 10% lower this year, with China’s lackluster economic recovery and higher US and European interest rates weighing on the outlook for demand. The surge in borrowing costs is leading to lower global oil inventories, possibly setting prices up for spikes further down the line.
“The oil balance will likely tighten and so will financial conditions,” said Tamas Varga, an analyst at brokerage PVM. “Persistent recession worries will probably encumber but not prevent oil from marching higher.”
A large majority of US Federal Reserve officials agreed that more tightening will likely be needed this year, the minutes from the Fed’s latest meeting showed. Further hikes would aid the dollar, potentially making commodities priced in the currency less attractive. The greenback was flat on Thursday.
To get Bloomberg’s Energy Daily newsletter direct into your inbox, click here.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.